Coinbase Makes a Bet on ‘Enterprise-Grade’ Liquid Staking

Coinbase, a major cryptocurrency exchange based in the United States, is providing financial support for the creation of the “first-ever” enterprise-grade liquid staking protocol. This will bring know-your-customer (KYC) checks to the realm of decentralized finance (DeFi).

The new liquid staking protocol is reportedly being developed by Alluvial, a development firm made up of people with experience from various DeFi-related projects, as stated in an announcement made by Coinbase on Tuesday.

According to the announcement, liquidity has been described as “a critical component of a maturing web3 economy,” and liquid staking has been called “one of the most rapidly growing yet nascent market segments.”

Instead of having to store or lock away staked assets, one can engage in liquid staking, which involves using those assets as collateral for activities such as trading and lending. Stakeholders receive receipt tokens in exchange for the tokens they stake, and these receipt tokens can then be used to engage in a variety of other activities that are available within Web3 and DeFi economies.

Coinbase & Alluvial

Coinbase added that Alluvial’s goal is to expand the protocol through a procedure that is open and transparent. According to the statement, the protocol will ultimately transition toward community governance using a decentralized autonomous organization (DAO) “with broad industry participation.”

According to the post, the proportion of staking done with liquid Ethereum (ETH) has increased from less than 1 percent in January 2021 to more than 30 percent today. According to Coinbase, even though an increasing number of businesses are interested in taking part in liquid staking, the solutions that are currently available do not satisfy their requirements in terms of security as well as KYC and anti-money laundering (AML) regulations.

According to the announcement, as the developer of the new liquid staking protocol, Alluvial seeks to bridge the gap between existing liquid staking solutions and what companies need by requiring contributors to enable embedded KYC and AML checks. This will enable Alluvial to meet its goal of bridging the gap between existing liquid staking solutions and what companies need.

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